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Thursday, February 21, 2008

The merger effect

In the software industry, M&A are known to the fastest way to ramp up customer & product stack portfolio. It occasionally creates shareholder value too, though not guaranteed. But hardly does anyone concern how the customer sees it. Agreed, making predictions is a tricky business to begin with. But in the case of the business intelligence (BI) market, recent consolidation has made the task even more difficult than usual and left industry experts largely at odds.

Within the last year, Oracle has acquired Hyperion, SAP acquired Business Objects and IBM acquired Cognos. The only agreement is that until "mega-vendors" SAP, IBM and Oracle announce integration strategies for their recently acquired BI technologies -- expected to happen sometime in the next six to 12 months -- customers have little more to rely on than their wits when making BI buying decisions. Even then, the only sure bet is that they will have to make some difficult choices. The toughest decisions will fall to customers of Business Objects, Cognos and Hyperion, whose IT infrastructures are not based on the technology of the acquiring vendor -- SAP, IBM and Oracle, respectively.

Exactly why I say it makes sense for open source BI companies like Pentaho to come up with expansion plans to take on the significant consolidation in the estimated $6.25 billion business intelligence industry. Hopefully, it will tempt the big enterprise players not to raise prices for upgrades and maintenance.

But then in their post-merger avatars, will they remain the darling of SMB’s…? What do you think…?

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